After a year of sparse shelves, rampant stock-outs and a tense holiday season that saw seasonal sales dip on Halloween, it’s understandable that major retailers across the country want to stock up on merchandise early so as not to be taken aback.
Although planning ahead and building up inventory makes good business sense, the problem is that it is also expensive and fraught with risk, as consumer buying habits are difficult to predict and are easily affected by external influences – especially now – when inflation and other macroeconomic challenges arise. problems for retailers that hadn’t been seen for generations.
While Amazon and Walmart were busy refining their sales efforts and operations, the mood for retail this week was set and dominated by rival Target, which told investors (June 7) that it was going into “aggressive cost control” mode via a multi-pronged “inventory optimization” strategy that will see plenty of sales across its 2,000 stores and website.
Although the announcement took investors and markets by surprise, the cost-cutting culprit was the same, as the Minnesota-based retailer pointed to a “rapidly changing economic environment” due to growing challenges with labor costs, high fuel prices and inflation.
Don’t blame the messenger
Target may have been the messenger, but the message it delivered was relevant to the entire industry and sparked a week of repercussions for retailers around ongoing inventory and cost issues.
This reality check served as a reminder that all is not well in the retail patch and that the recent mumbles of hope and budding optimism in the second half may have been premature given that Walmart had made similar comments. a month earlier when he announced he would act. to scale its bloated inventory levels after delivering its own earnings disappointment.
“We appreciate that our inventory is up because a lot of it needs to be in inventory,” Walmart CEO Doug McMillon told investors during the company’s first-quarter earnings call on May 19. . “But a 32% increase is more than we want, so we will deal with most or all of the excess inventory over the next two quarters.”
McMillon said soaring food prices took more dollars than expected from general merchandise spending, but assured investors he was taking steps to correct the problem and would continue to do so.
The current challenge, faced by Walmart, Amazon, and almost every other mass retailer, is building the right inventory while correctly deciding which items to mark down and move. If that weren’t enough, this real-time projection and pricing matrix unfolds within a dynamic market that has several low-cost players who refuse to be undersold.
It should make for an interesting summer – and one filled with bargains.
If the shoe fits
In the meantime, as Amazon faces its own share of supply chain challenges and changing consumer spending ramifications, the Seattle-based online giant this week unveiled two notable efforts aimed at to improve convenience.
In announcing Amazon Luxury’s European expansion, the e-commerce leader is betting high-end consumers want the same convenience and fast delivery service for expensive designer clothes and accessories as Amazon’s “regular shoppers.” business when ordering everyday items and groceries.
“This is just the beginning, and we look forward to continuing to support brands with innovative tools and resources so they can share their latest collections and unique stories with our customers across Europe season after season. “, Ruth Diaz, vice president of Amazon Fashion Europe, said of the rollout of Luxury in Germany, the UK, France, Italy and Spain.
It remains to be seen whether very affluent consumers will actually want to click through to buy a $13,000 Elie Saab dress without seeing her try it on, compared to an in-person visit to a designer boutique.
At the same time, and much more in line with its main objective, Amazon has also rolled out its new virtual try-on feature for shoes. Like its luxury movement, try-on technology is also being touted jointly as a consumer convenience tool as well as an opportunity for brands to better showcase their products to Amazon’s huge customer base.
End the old, make way for the new
Walmart and its rivals may be plagued with an ongoing inventory challenge, but that’s not stopping the company from looking for new ways to stock its 4,700 U.S. stores and also easing supply chain challenges. supply with ready-to-use new products created by an army of servants. contractors.
This, as the big-box leader moves forward with what will be its biggest-ever annual ‘Open Call’ event at the end of June, when it brings together 1,200 finalists to showcase their wares to the brass. of the company.
“Each vendor will be given a one-on-one 30-minute pitch meeting for the chance to close deals ranging from supplying product to a few local stores to supplying product to hundreds of Walmart and Sam’s Club locations as well as at Walmart.com and Walmart Marketplace,” the company’s announcement said.
‘Open Call’ is Walmart’s largest product sourcing event and part of a 10-year, $350 billion commitment to create national jobs through ‘products made, grown or assembled in the United States’ .
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